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Online Sales and the Implications for Shopping Centres

The UK has one of the greatest proportion of online sales in the world so it offers a beacon of what is going to happen to shopping centres.  A recently published paper by Prof Colin Jones and Nicola Livingstone in the International Review of Retail, Distribution and Consumer Research* offers some insights into the changing retail hierarchy. Here, Prof Colin Jones reflects on the findings.

The research examines the changing location of stores of a major fashion retailer and encompasses interviews with three of Britain’s leading retailers.  There has been a substantial increase in online turnover in recent years.   Online sales represented 10.7% of retail sales in April 2014.  As a result online retailing has gained a central role within large retailers’ businesses.  But there are also long term trends driven by the motor age that have seen a shift to out of town retailing.  So the question is how do the new ICT retail developments relate to and interface with the decentralisation forces?

Retail decentralisation is now well established, symbolised by the growth of retail warehouses and then retail parks since the early 1980s.  Retail parks have attracted national brands from the traditional high street and there is an increasing overlap in the goods available for sale.  Overall there has been a substantial expansion of out of town shopping centres despite policies designed to deter them.  The long term implications are that traditional small town shopping centres still exist but their fashion and food retailing roles have been significantly diminished. There has been an upheaval in the longstanding retail hierarchy, which can now, at best, be described as diffuse.  This is the context for the expansion of online retailing.

Online sales have not occurred uniformly across types of retail goods or retailers.  Online sales in the grocery sector are a minimal element compared to in-store sales.  The two sectors where sales have grown most are the textile, clothing and footwear stores (i.e. predominantly fashion retailing) and non-specialised stores (i.e. department stores).  Retailers with a visible and recognisable brand encourage consumer trust and utilise stores to attract online sales, especially through ‘click and collect’/‘click and deliver’ market place.  Brand recognition goes hand in hand with an existing network of shops and access to the necessary investment finance to evolve the physical retail space. Shops can be reformulated to act as ‘showrooms’ enabling consumers to examine products before buying online.  Interestingly department stores are experiencing strong year on year growth in online sales, as much as 30.3% in 2013.  In contrast high street units offering financial and travel services have been particularly severely affected and suffered heavy closures.

Retailers with a strong brand and an online presence can in theory reduce their physical store network.  Indeed there is an apparent industry consensus that online sales will lead to a substantial decline in retail space, only the scale of the predictions vary.   The implications for individual shopping centres to date have been that large metropolitan retail centres appear to be the most resilient together with smaller centres focused on convenience shopping. Larger shopping centres have benefitted from their appeal to the ‘leisure-tourist-shopper’ rather than just the functional/utilitarian shopper.  The most vulnerable centres are ‘secondary and medium sized centres’ already struggling before the rise of internet sales.

The research in the paper is based on three interviews with market leading retailers to ‘omni-channel’ online shopping: Next, John Lewis and Debenhams.  In addition shifts in retailer locations and possible effects on the hierarchy are considered by reference to the changing network of Next stores.  The research finds that Next is acquiring and increasing its amount of space out of town, and the evidence indicates that in some instances an opening in a retail park is associated with a closure in a nearby town centre.  Next, the largest ‘high street’ UK fashion retailer now has more shops in retail parks than in town/city centres.  Its latest unified format stores combining male and female fashion, home furnishings and a coffee shop are suited to, if not designed for, the flexibility of large units in retail parks.

The interviews reveal that the growth in online shopping is becoming a key consideration in their real estate decision making. The adjustments to accommodate online sales are progressive and responding to the internet influence is seen as important for market position, encompassing brand image and competitiveness.  Online retailing is viewed as complementing the in-store experience and enhancing profitability for these retailers.  Retailers note that online sales can reinforce sales in-stores, and opening a new store stimulates local online sales.  Unlike the expectations of falling aggregate retail space noted above, Debenhams, Next and John Lewis all continue to extend their store networks, with Debenhams and Next predominantly (but not exclusively) favouring out of town locations.  It seems that the ‘click and collect’ strategies of leading retailers has therefore reinforced the populating of retail parks with fashion retailers, and the restructuring of these types of shopping centres away from bulky goods.

The online revolution is still in its infancy so these trends may still be subject to further change.  However, large retailers seem set to continue to have a physical presence, in which shopping is an experience, with the opportunity to browse in-store, and the use of the ‘high street online’ is an optional extra.  In terms of shopping centres the overall impact on the urban retail hierarchy appears to reinforce decentralisation trends promoted by car usage.


Jones C and Livingstone N (2017) The ‘online high street’ or the high street online? The implications for the urban retail hierarchy, International Review of Retail, Distribution and Consumer Research,



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